Basket

AAA

DEFINITION of 'Basket'

A single unit of at least 15 stocks that are used in program trading. Baskets are traded on both the NYSE and the CBOE for institutions and index arbitrageurs. Both instruments allow for the composite purchase of all of the stocks in the S&P 500 in a single trade. Baskets were created after the stock market crash in 1987 to better facilitate institutional trading on the index.

INVESTOPEDIA EXPLAINS 'Basket'

Basket was also the nickname given to a specific type of financial instrument that briefly traded on the Philadelphia Stock Exchange in 1989. This security was removed from trading due to regulatory controversy over its nature. The baskets that traded on the other two exchanges eventually also ceased trading due to poor volume.

RELATED TERMS
  1. Chicago Board Options Exchange ...

    Founded in 1973, the CBOE is an exchange that focuses on options ...
  2. Credit Derivative

    Privately held negotiable bilateral contracts that allow users ...
  3. New York Stock Exchange - NYSE

    A stock exchange based in New York City, which is considered ...
  4. Derivative

    A security whose price is dependent upon or derived from one ...
  5. Security

    A financial instrument that represents: an ownership position ...
  6. Christmas tree (oil and gas)

    A vertical assembly of mechanical elements used in oil exploration ...
Related Articles
  1. How do I use a
    Options & Futures

    How do I use a "basket" option?

  2. The Uptick Rule Debate
    Active Trading Fundamentals

    The Uptick Rule Debate

  3. CDOs And The Mortgage Market
    Insurance

    CDOs And The Mortgage Market

  4. Stocks: Who Needs Them?! (You, If You ...
    Savings

    Stocks: Who Needs Them?! (You, If You ...

comments powered by Disqus
Hot Definitions
  1. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  3. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  4. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  5. Budget Deficit

    A status of financial health in which expenditures exceed revenue. The term "budget deficit" is most commonly used to refer ...
  6. Floating Exchange Rate

    A country's exchange rate regime where its currency is set by the foreign-exchange market through supply and demand for that ...
Trading Center